Cash Game How are gamblers to report their taxes now?

DrStrange

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Best I can tell. the tax reform act has changed the effective calculation for how we report and pay taxes on gambling income.

Here is my understanding:

1. Any money won gambling is reported as misc income on the front page of your tax return. Please note this is not your NET income, it is the totals of all the winning sessions for the year. Even someone who lost money for the year is required to report their gross "income" without considering their losses.

2. It is not clear that any gambling losses can be claimed as an itemized deduction in 2018, but for the moment let's say you can claim them. The problem is you have to lose enough to overcome the standard $24,000 deduction - which most of us are not going to do. And even if you do have big enough losses to claim, you still lose the first $24,000 (less any other deductions.)

3. US Tax payers are required to report income per session played. For poker players that would be each time you sit at a table, it is a reportable session. Similarly for black jack / craps / table games, each time you play at a table that is a session. There is debate about how the sessions rules work for slot players and sports betting, but safe to say a session is shorter than your whole trip. Perhaps at best a single day.

Bottom line, you can not net your winnings against your losses and report a single number. The literal letter of the law says that people who have a net loss, still must report their "income" and then see if the tax code allows the loss. While that is the law as written, I don't know of a single example of a Vegas loser getting hit with income taxes on the money he/she didn't win.

note this could be a serious issue for profitable poker players. Not being able to deduct losing sessions from winning sessions could wipe out the winnings or more.

I explored 2+2 on this question and came away unsatisfied. The discussion revolved around professional gamblers and how their schedule C income should be reported and the advantages of forming a corporation to house a gambler's income. See it here:
https://forumserver.twoplustwo.com/...trump-tax-proposals-us-professionals-1664526/


Personally, I thing a netting approach seems best - just report the net income as a single number on the front page as misc. income. But I thought it might be worthy of a larger discussion.

Lastly, note this does not have as great an effect on 2017 taxes though some people who don't itemize might already face this problem.

DrStrange
 
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Rhodeman77

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For full time professional players it may make sense to stop using their players cards as that is a very easy way to log exactly how many hours they play and when a session actually begins and ends. Of course the perks they get will disappear as well.

I know lots of table game players that refuse to be swiped in while playing poker because it brings their average money wagered per hour way down.
 

slisk250

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I find it strange that casino and lottery winnings are taxable.
Maybe if you incorporate you can report losses against income....

If you go to a horse or dog track and hit a winning ticket over a certain amount ($600 maybe???) They will make you fill a W2 right there. We hit a trifecta worth a few thousand a few years back and immediately began picking up all the losing tickets on the ground and counted them as losses until we were even.
 

BiGGyT

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Like any business, you need to keep records of your buy in & win/loss amounts daily. Believe there are apps, but use quickbooks if you are serious about it.

If I remember, losses are not itemized deductions, they should be offsets to W2G wins. I have used my win.loss statement to offset my W2G a couple of times, do not think the tax law changes affected that. I will check with one of the CPAs to make sure.

T

edit

Well crap, I guess I was itemizing when I actually got some W-2Gs

https://www.irs.gov/taxtopics/tc419

so yeah, if you are a winner, and only a casual gambler, it will screw you a bit. If it is a business, then it is an offset to income. File for a TIN for "XXX's Casino Co.", and keep your books and receipts.
 
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DJ Mack

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We hit a trifecta worth a few thousand a few years back and immediately began picking up all the losing tickets on the ground and counted them as losses until we were even.
There used to be a little deli in town that had a trash can right by the lottery station. The owner would pick out the $20 losing instants and set them aside. For his best customers (lottery or otherwise) you could ask him for a brick of losers which was usually about $1000 worth and he'd give you what you needed. I knew a few fellas that would do that after a profitable casino session where they had to do tax paperwork since they refused to use players' cards for one reason or another.

The place closed a few years ago when the owner retired.
 
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